The FTSE 100 has picked up nicely since the banking crisis, and is up a solid 3.73% since the start of the year.
It’s trading at 7,837.64 as I write this, a little below its all-time high of 8,000. I’m confident that it will break new highs when the next bull market arrives. And I’m keen to load up on cheap FTSE 100 stocks before it does.
I need to get my hands on some cash
Analysts are poring over every piece of data to work out where inflation goes next and how the US Federal Reserve, Bank of England and other central bankers will respond.
They’re working on the assumption that when the Fed ‘pivots’, and starts cutting interest rates rather than increasing them, stock markets will rocket. The problem is they don’t know when that will happen.
Attitudes shift from week to week. At the end of March, everybody was anticipating ‘higher interest rates for longer’. After today’s US inflation figure of 5%, the mood is shifting to ‘lower rates, sooner’. Tomorrow it could shift again.
Anybody who followed all the contradictory opinions out there would quickly lose their mind. I’m not doing that. I couldn’t say whether the next bull market is coming later this year, or whether we’ll have to wait for 2024.
We might even get a crash or two in the interim, it’s impossible to forecast with any reliability so I’m not even going to try.
While I wouldn’t complain if a big old bull market started running tomorrow, I’d rather it waited a few months. That would allow me to go shopping for shares at today’s reduced prices.
There are still loads of tempting FTSE 100 stocks out there on cheap valuations, and I’m trying to assemble enough cash to buy as many as I can.
I like these two cheap stocks
Paper and packaging group Smurfit Kappa has just caught my eye. It should benefit when consumers regain confidence and buy stuff online for home delivery.
It’s a solid company that currently yields 4% yet trades at just 9.42 times earnings. I’d much rather buy it before the next bull run, when it’s still cheap, than afterwards.
I’m also tempted by sales and marketing firm DCC. The company is plugged into the economic cycle, benefiting when businesses are buoyant and have money to spend on promoting their goods and services.
DCC has inevitably struggled in the recent downturn and currently trades at a bargain 10.1 times earnings and yields 3.74%. I like the look of those numbers. I don’t have cash to buy either Smurfit Kappa or DCC right now, but I’m saving up.
I’ll need to do more due diligence on both stocks to identify the risks before parting with my money. Just because they’re cheap doesn’t necessarily make them good value, like any stock. Their share prices could flounder even if we do get a bull run.
Yet both are backed by solid underlying businesses with steady cash flows. In other words, just the type of company that could take off when sentiment picks up. There are plenty more FTSE 100 stocks I’d like to buy too. Let’s hope that bull run holds off until I’ve bought ’em all.
This post was originally published on Motley Fool
